According to Mr Rizwan Sajan chairman of Danube Building Material, building material sector witnessed a tough 2011 in Gulf countries in the wake of Arab Spring, stiff competition and peak level price war.
Mr Sajan said that despite tough competition coupled with international and regional issues, Danube managed to maintain a 25% growth in sales in 2011 as compared to previous year. He added that "We also aim to achieve same 25% growth in 2012 with expansion in Gulf countries."
He said that key business generating markets were Abu Dhabi, Qatar, Oman, Bahrain and Saudi Arabia last year and the company expects the trend will continue in 2012. Danube sales are expected to reach AED 2 billion by the end of 2012. He added that "We will be closer to our target of a billion dollar company in 2015."
In 2011, Danube announced that it's planning an initial public officer in 2015 after achieving USD 1 billion mark turnover.
The company opened its 34th showroom in Dubai last month. Established in 1993, Danube provides more than 25,000 products in stock and in house value added services in all of its multiple set of showrooms across the Middle East region and India.
Excerpts from the interview:
Q - How building material companies benefiting with billions of dollars projects in Gulf region?
A - Building materials companies in the region will definitely benefit from the various projects which are announced and which are yet to come in the GCC region. For example in the Qatar market; Qatar is an untapped market with rich potential especially with the announcement of the World cup.
New projects in infrastructure, housing, hotels, roads, etc are bound to increase in Qatar in the coming years.
This will need a lot of building materials that too in high quantities. Ready availability of stock and price will be the key deciding factors during these times and that's where Danube always has the upper edge. We always have a huge ready stock of building materials to cater to projects of all value and our strong purchasing network helps us to get the best rates as well.
Demand for Building material will always remain as long as projects and new developments keeps coming to the region; and this is bound to happen.
Economies have to grow so new projects and developments have to come. I should say the Middle East is gradually recovering from its financial crisis situation and it's evident.
Q - What kind of challenges the industry faced last year?
A - In 2011, one of the major challenges was the price war and unhealthy competition in the market. Then the political crisis in some markets added to the issues. Another point of concern was the liquidity situation in the market. Rising prices of building materials was another setback last year.
Q - Do you see opportunities in 2012?
A - Yes this year we look forward to lot of opportunities; the markets in GCC are slowly recovering the crisis situation.
More projects are being announced and yet to be announced in the GCC which will greatly boost the building material segment. Markets like Saudi, Qatar, and Abu Dhabi are already seeing lot of new projects, which are coming up.
Investor confidence is slowly regaining. Since the news that European markets will take longer time to recover, investors are more confident to invest in GCC countries in which they see lot of potential in the coming years.
Q - How was the business in the UAE and other Gulf countries last year?
A - Business in 2011 was good, even though there were ups and downs. The competition was stiff and the price war was at its peak. Overall the business was good.
The projects, which were half way got completed driving more demand for building materials in the market. Yet again, we achieved the significant growth of 25%; we had achieved the same feat of 25% growth in 2011 also. Even though there were slight unrest issues in some markets, we had kept our focus and targeted the year on a month to month basis.
We have planned 25% growth right from the beginning. We also aim to achieve 25% growth in 2012 as well; which will take us much closer to our interim objective of reaching a billion dollar in turnover by 2015.
Q - Which market performed well?
A - I think it was combined performance; most of the regions shown signs of gradual recovery from the so-called financial crunch.
Our Key business generating markets were Abu Dhabi, Qatar, Oman, Bahrain and Saudi Arabia.
Our export market to the African countries has also contributed to this growth of Danube in 2011.
Q - What are your expectations with 2012 in terms of sales growth?
A - Next year also we aim to achieve 25% growth. By end 2012 our sales would touch AED 2 billion mark.
We will be a billion dollar company in 2015 and we are approaching that interim target in planned and professional way.
Q - What's your expansion plan for 2012?
A - In 2012 we are planning to open 10 more operations across GCC. We see the current market situation as an opportunity and we want to expand our operations across the Middle East to consolidate our regional leadership in the building material segment.
Q - Are you expecting break even for Buildmart showrooms this year?
A - We are optimistic that our retail operations of Buildmart will be close to reaching the break even levels by the close of this year. We need to have more showroom presence at strategic places in order to take Buildmart to the next level of retailing.
(Sourced from www.khaleejtimes.com)
